CRE investment sales hit $21B in first half of 2022: report

Sales up 99%, but rest of year looms large

A photo illustration of 450 Park Avenue (left) and 8 Spruce Street (right) (Douglas Elliman, Reading Tom, CC BY 2.0 - via Wikimedia Commons, Getty Images)
A photo illustration of 450 Park Avenue (left) and 8 Spruce Street (right) (Douglas Elliman, Reading Tom, CC BY 2.0 - via Wikimedia Commons, Getty Images)

Commercial real estate investment sales started strong in the first half of the year. The next half of 2022, however, may be a different story.

New York City investment sales rose 99.1 percent year over year in the first half, according to data from Cushman & Wakefield reported by the Commercial Observer.

Investment sales in the first half reached a total volume of $21.6 billion. Volume slowed slightly in the second quarter, though, when there was $9.8 billion transacted.

There were 554 transactions in the second quarter involving 719 properties. Core property types averaged $582 per square foot in the trades, down from $604 per square foot in the first quarter.

Nearly every sector saw an increase in deal volume in the first half year over year. The multifamily market led the way: elevator property deals rose 373.1 percent, while walk-up property deals increased 114.1 percent. Other property types to see a big increase in deal volume were offices (168.1 percent), industrial (83.8 percent) and retail (57.7 percent).

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The most notable investment sale to close in the second quarter was Blackstone’s acquisition of 8 Spruce Street. The firm was on the verge of acquiring the luxury rental tower from Brookfield Asset Management and Nuveen towards the end of last year, ultimately closing on it for $930 million.

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MSCI Real Assets chief economist for real estate Jim Castello (Getty Images, MSCI Real Assets)
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Blackstone's Stephen Schwarzman and 8 Spruce Street (Getty, Wikimedia)
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A photo illustration depicting the death of the 421a property tax break (NYC Housing Preservation and Development, iStock)
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Dead and buried: 421a is gone. Will it ever return?

While investment sales have been strong in recent quarters, a downturn could be on the horizon due to multiple factors.

Development site deals rose 51 percent in the first half year over year, but the expiration of the 421a tax abatement program could quell demand for sites as developers cope with the loss of a critical multifamily financing tool.

Rising interest rates are also slowing down commercial real estate transactions, as lenders cease activity. According to Green Street, commercial property prices across the country dropped 5 percent in the second quarter and could slip another 5 percent by the end of the year.

— Holden Walter-Warner

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